I’m a staff writer covering all things Wall Street and Investing. I have a love hate relationship with the world of finance. I am fascinated by the industry’s power and influence around the globe, and the ingenuity of the people it employs. Not so much a fan of the lack of accountability when the system fails—which it often does: I'm always on the hunt for people and companies to profile.

Want To Save America? Let Big Banks Get Bigger: Bove

"The United States is shrinking its big banks. It is using every political technique it can muster to reduces their profits and profitability. It is on a vendetta to curtail banking activity. No thought is being given to the fact that these policies will kill the dollar as the world’s reserve currency," Bove.

It’s not often you hear anyone calling for the nation’s big banks to get even bigger but that’s exactly what Dick Bove is recommending.

In a note today the outspoken bank analyst says the American dollar is at risk as the world’s reserve currency. The only way to fix this is by building more banks and making them bigger than ever. Then, they must be immersed in the global financial system to ensure reliance on the U.S. dollar, Bove says.

There are plenty of benefits that come along with being the go-to currency across the globe: lower interest rates and the fact that all major commodities in the world are priced in dollars lowering the prices of those commodities for Americans. But the most important benefit is not having to worry about budget or trade deficits because the country can simply print its own money and pay its bills.

However, Bove argues, all that fun could easily disappear over the course of the next few years as the importance of U.S. banks is threatened by rules and regulations calling for their downsize.

From Bove:

If this country loses the ability to print the global reserve currency at will the nation will then be forced to pay its debts. This will force austerity programs on the American public that will shake the national economy to its foundation. The riots seen in other nations as they attempt to bring their budgets into balance will be replicated in the United States.

One way to prevent a disaster of this magnitude is to build huge banks in America, banks that are able to compete across the globe. These banks will spread dollars everywhere as a consequence of their financial dealings and they will protect the currency’s status as the key world reserve currency. The need for doing this now is made evident by the statistical data shown above. There are each more Yen, and Yuan, than there are dollars. Each of the nations producing these currencies would like their currency to be paramount globally and some of these nations are actively working to see this happen. Most are supporting the growth and migration of their banks worldwide to assist in this process. The population data shows where the greatest growth in incomes and wealth is likely to occur in the coming decades. It points the way to where American corporations must go to build their profits. These businesses need American banks to be in place to support them in these locales. This is not an insurmountable task. It can be done. American banking has superior skill sets to its global competitors even though the foreign banks are growing while the Americans are being asked to shrink.

Calling for the break up of big banks is certainly a popular notion these days. The argument being the bigger the bank the harder it will fall. Think September 2008. But breaking up is hard to do, as they say. SNL financial analyst Nancy Bush wrote a smart piece last week called the Dimon Discount where she asks a very important but unanswered question: How exactly would we go about breaking up the banks? Here’s some of her commentary:

But here’s the significant question that would arise at that time — break them up into what, exactly? (Richard Fisher and his ilk never seem to address that question.) Would Jamie Dimon be able to simply split off his investment bank, call it J.P. Morgan & Co. and set the Chase retail franchise free to grow as a less-capital-intensive commercial bank? (Sounds simple enough, but somehow I think it would be a technological nightmare.)

How about Citigroup — what is actually left there to split up? Would it simply shed its domestic franchise, incorporate itself in Luxembourg and become a non-U.S. bank? (A la Deutsche Bank AG, which has basically de-banked itself to escape Dodd-Frank Act restrictions.) And while there have been recent calls for Bank of America to split off not only Merrill Lynch but also the remnants of Countrywide and MBNA, it would seem to me to be hard to operate a viable national deposit-gathering franchise without the ability to offer such important retail products as mortgages and credit cards.

As for Merrill Lynch — what would then happen to the wealth management business attached to that venerable Wall Street name? Is asset management really all that “risky” an endeavor?

So “break them up” may be a popular mantra for Occupy Wall Street and its academic apologists, but I have yet to see anybody — Krugman, Fisher, Volcker, Stiglitz, Ken Rogoff, etc. — make any serious effort to examine this issue objectively and write about how this Herculean task might realistically be accomplished, not to mention what the sudden dearth of large banks might do to the American economy. And what about Wells Fargo, which is among the top five banks and has doubled its deposit market share since the financial crisis but does not have significant capital markets exposure?

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Isn’t it nice someone has a clue that the strength of a country’s financial institutions reflects on the economic strength of the country?

BO NEVER DID

Just think how much more solid the country/nation’s confidence would be if the president stood up at the lowest points in 2008-09 and guaranteed the soundness of the these great institutions and the confidence that could’ve have instilled.

Rather BO gets on his stimulus horse claiming things were as bad as the GREAT Depression and started stress testing our largest banks.

We could have done audits, tests, benchmarks behind the scenes but he made it a public circus – calling the CEOs to DC and villifying them – still is

There needs to be some way of knowing whether the talking heads are sane. Is Bove sane? What if I were mouthing my beliefs, and for some reason or another, the press followed my every word, … would you put any “stock” in it? Bove may be right about something, but he might better be viewed as a curiosity.

I agree ! The United States of America needs strong banks to survive the coming obstacles set by the economies of the World. Many alternatively educated radicals, financial and political speculators may benefit from the break up of US banks, but the rest of the country would only suffer.

I don’t think this will save America at all. The banks will do whatever is in their best interest. If the banks become more global, then any devaluation of the US dollar will hurt the their bottom line and so its possible this would accelerate the use of a basket of currencies rather than the American dollar as the main currency.